Date of this Version
Havens, A. 2022. Agricultural Carbon Markets: How Could They Work?. Undergraduate Honors Thesis. University of Nebraska-Lincoln.
The resurgence of voluntary markets in which consumers can purchase carbon credits generated by agricultural carbon sequestration has brought up many questions for farmers looking to potentially enter the market. Past carbon markets, such as the Chicago Climate Exchange, ended when a recession hit, causing demand for credits to swiftly decline. How can modern voluntary markets face these challenges along with new ones and be successful? This research paper, completed as an undergraduate thesis project at the University of Nebraska-Lincoln, examines the economic and scientific factors behind soil carbon sequestration credits. An extended literature review combined with estimation of a supply curve and equilibrium price for the market are used to provide farmers and the public with information about expected sequestration rates and costs for regenerative agricultural practices. The science behind no-till and cover crop carbon sequestration is explained as well as the economics behind production of carbon offsets by farmers and demand from consumers. Using data values found in existing scientific literature, a theoretical market supply curve and equilibrium price are created that can be used as a basis for further research.
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